Back to earth? After post-pandemic boom, International Monetary Fund projects economy to slow and calls for more safeguards against risk

Published by BBNTEAM at May 11, 2023

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Posted: Thursday, May 11, 2023. 9:32 am CST.

By Aaron Humes: The party isn’t quite over, but the International Monetary Fund (IMF) says Belize needs to have safeguards in place as economic growth slows down following a two-year post-COVID-pandemic boom.

According to Reuters, the IMF’s final report on its annual Article IV consultation with Belmopan projected economic growth of 2.4 percent in the current fiscal year and two percent through the medium term, with inflation to edge down to just above four percent after reaching a high of six percent last year.

The IMF Executive Board encouraged the government on its continued path toward fiscal management to further reduce public debt and called for measures to enhance revenue streams, reprioritize expenditures and increase priority spending on infrastructure, targeted social programs, and crime prevention.

Growth should center on structural reform to provide greater access to credit for micro, small, and medium-sized enterprises (MSMEs) while building resilience to climate change and related disasters and called for a Disaster Resilience Strategy that it said could help unlock multilateral and donor funding to support these efforts. At the same time, it asked for limiting Central Bank financing to the Government in terms of Treasury Bills and Bonds which form at least a quarter of the national debt.

IMF Directors also encouraged continued efforts to preserve financial stability and strengthen the AML/CFT framework. While noting the authorities’ effectiveness in resolving problem loans and strengthening domestic banks’ balance sheets after the pandemic, Directors cautioned that risks remain, requiring continued vigilance. They encouraged the authorities to complete the update of the national assessment of Money Laundering/Terrorism Financing risks and the action plan, ahead of the mutual evaluation by the Caribbean Financial Action Task Force in November 2023.

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